The UAE, in particular Dubayy, epitomizes trade. The federal government promotes open and free trade as an official policy, and a thriving source of income and full employment has resulted. The oil economy (world prices and demand as well as local production) and regional security strongly influence trade. Oil and gas exports account for about three-fourths of all exports. The UAE's balance of trade surplus grew during the boom years of the 1970s but leveled off in the 1980s with decreased oil production. Although the Iran-Iraq War buffeted the oil economies of the region, Dubayy's fruitful trade links with Iran helped it to have exports and reexports of US$354 million in 1987.

The end of the Iran-Iraq War in 1988 led to a 20 percent increase in UAE imports, reducing the trade surplus from its 1987 level of US$5.2 billion (Dh19 billion) to US$3.7 billion (Dh13.7 billion) (see table 30, Appendix). But oil price increases andproduction increases resulting from Iraq's invasion of Kuwait in 1990 created a windfall for the UAE and drove the federation's trade surplus to US$9.3 billion (Dh34.1 billion).

Administering customs and setting rates are functions reserved to the individual amirates, and duties and regulations therefore vary among them. In 1982 Dubayy and Sharjah reduced their customs duties from 3 percent to 1 percent, bringing them on a par with Abu Dhabi's tariffs. In 1983 a 4 percent general import tariff was imposed to conform to agreements among GCC members on minimum duties.

Principal imports are manufactured goods, machinery, transportation equipment, food, and live animals. Leading suppliers in 1988 were Japan, Britain, and the United States. Nonpetroleum exports include basic manufactures, aluminum, and cement. The reexport trade overshadows national exports. Federal exports, which consist largely of petroleum, go mainly to Japan (see table 31, Appendix). In 1988 national exports amounted to US$518 million while reexports stood at more than US$2 million. Iran, Qatar, and Saudi Arabia are the principal recipients of reexports. The view along Dubayy's bustling creek gives ample evidence of the vibrant reexport trade. Scores of large, motorized dhows tied up four and five deep line the wharf, their decks and holds packed with refrigerators, television sets, clothing, toys, and even automobiles. In 1991 Dubayy's imports (much of which was destined for reexport) arrived from Japan, the United States, China, Britain, and the Republic of Korea (South Korea).

Data as of January 1993